Thai opinion: The secrets to corporate longevity

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STREETWISE
The secrets to corporate longevity
Achara Deboonme

BANGKOK: -- Doing a quick search for companies whose roots go back more than 100 years, I came across some interesting information.

Wikipedia refers to a 2008 study by the Bank of Korea, which investigated 41 countries and found there are 5,586 companies older than 200 years. Of these, over 3,000 are located in Japan, 837 in Germany, 222 in the Netherlands and 196 in France. Meanwhile, of the companies with more than 100 years of history, 89.4 per cent employ fewer than 300 people.

A nationwide survey of Japan counted more than 21,000 companies more than 100 years old as of September 2009.

That made me curious. How many Thai companies can boast of being more than a century old?

Wikipedia's answer is astonishing: Six. They are Siam Commercial Bank (SCB), the Government Savings Bank, Berli Jucker, Siam Cement Group (SCG), Mandarin Oriental Bangkok and Osotspa. Well, if the Mandarin Oriental (now 135 years old) and Berli Jucker (132) can be counted as among the oldest Thai concerns, we should also be including companies established by foreigners, like B Grimm, Diethelm and Singer.

Why so few companies over 100 years old in a country that boasts a history that reaches back 700 years?

Sompop Manarungsan, president of Panyapiwat Institute of Management, shed some light on this. The keys to a business's longevity, he said, are horizontal expansion so as to cash in on expertise, plus the ability to adjust to the changing business environment. Another major factor is professional leaders, as in the case of SCB and SCG.

Evidence suggests he is right. Studies show that most Thai companies start off as family businesses and nearly all of them flop in the third generation. Most of the failures are attributable to vertical diversification into areas where they had no expertise. Some are attributable to the first generation's wish to keep the business within the family.

A popular Thai soap opera reflected this in a storyline of a father wanting his three children to work in the company he established. In fact, the theme of grandsons failing to match their predecessors' ability, despite greater knowledge, is a coomon across the world.

Many family businesses prosper under the second generation, as the kids' take up the example of the father's hard work. Then comes the third generation, better educated and growing up as the business is prospering. They genuinely want to grow the business, but without the right workforce, diversification doesn't always produce the expected results.

Many leading companies have thrived by recognising and focusing on individual employees. "Rising Tide", a book that draws the lessons from 165 years of brand building at Procter & Gamble, reveals the process. In 1887, P&G recognised that no company grows quickly and successfully on the abilities of its owners alone. It launched a profit-sharing scheme that same year, spreading stock ownership among its employees. And this was decades before democracy was introduced in Thailand.

Putting emphasis on the role of the workforce is also a focus at Johnson & Johnson, which is 128 years old this year. CareerBliss, a popular jobs listing website, just announced its fifth annual Happiest Companies In America list, based on thousands of reviews submitted by professionals in 2013 and 2014. Johnson & Johnson was found to have the happiest employees in the US, with the highest average score for work-life balance, relationship with your boss, relationship with your co-workers, work environment, job resources, compensation, growth opportunities, and company culture.

With companies always looking for professional managers, insiders are usually considered the best choices. Yet, insider recruitment requires a mechanism that keeps drawing fresh young talent to the firm, some of whom might become perfect leadership material in the future.

The recently released global study "Aon Hewitt Top Companies for Leaders" shows GE, IBM, Hindustan Unilever, General Mills and ICICI Bank topping the chart.

"Since we first conducted this study in 2001, organisations have truly raised the bar on their commitment to leadership and the benefits are evident through higher financial returns, increased employee engagement and productivity and the continuous retention of top talent," said Pete Sanborn of recruitment company Global Talent.

One of the successful strategies here is engaging leaders who are "stabilisers", demonstrating versatility and staying connected with people and events inside and outside their organisation. They also focus on building talent programmes nimble enough to respond quickly to the market demands, yet also sustainable to deliver superior business outcomes.

I guess that to exercise the right strategies, you need far-sighted management teams and, ultimately, visionary leaders. And in this digital age, things move fast. As such, we might ask how long top companies today, like Apple, Microsoft and Google, will remain prosperous? Will they last more than 100 years? A lot depends on their current bosses.

Likewise, some Thai companies today might still be around a century from now - but only if they have the right leaders.

The problem is that succession plans remain a thorny issue, both in Thailand and elsewhere. In some companies (especially state enterprises), the board of directors plays a big role in choosing the next boss or bosses. That means the task is often left to the government officials who sit on the board. In private companies, the owners will have a say.

But whoever makes the big decisions, if they want their companies to survive to be 100 and older, they better not let short-term success cloud their vision.

Source: http://www.nationmultimedia.com/opinion/The-secrets-to-corporate-longevity-30249892.html


-- The Nation 2014-12-16

[Tatsujin]

Damn, I've got another 93 years to go to get on the list ...

[worgeordie]

Its because the first generation starts the company,the 2nd generation

builds the company up, and the 3rd generation runs it to the ground,

this is what happens in a lot of family controlled businesses.

regards Worgeordie

[lannachiangrai]

Thanks for posting, a thought provoking subject.

[wabothai]

The positive results of hardship is hardly known by the young generation. Only instant gratification. The younger Thai may learn from the Japanese work ethics.

[rickirs]

I have a dream - 1st generation starts the business from scratch

I believe in the future - 2nd generation grows the business with borrowed capital

I want change - 3rd generation cashes in

[connda]

The secrets to corporate longevity

$$$฿฿฿ Having politicians in your pocket ฿฿฿$$$

[connda]

Its because the first generation starts the company,the 2nd generation

builds the company up, and the 3rd generation runs it to the ground,

this is what happens in a lot of family controlled businesses.

regards Worgeordie

That's why smart corporations give the 3rd generation heirs enough money to slowly kill themselves off pursuing hedonistic self-gratification (ie drugs, alcohol, and fast, dangerous toys) while the corporation is firmly run by an non-family CEO and board of directors. I've seen it in action. It works pretty darn well.

[WilliamCave]

Customer service is vital to a company , and it seems Thais ain't good in the customer service .

Take what they can get today and not think of the customer tomorrow .

It's tomorrows business that helps a company survive.

I want the customer to trust me , continue to rely on me and depend on my service that I will supply there needs .

Repeat customers help build up the business again again .

Not to bash but Thais try make the most out of how much they can take form a transaction not thinking of me returning tomorrow .

Or try give a cheaper product on delivery , etc etc .

I have seen this my self being here in Thailand for 11 years .

To me like I explained to my wife better to make little less and give what they want and ok your profit is not as big but if you keep getting the same customer over and over and over now you have made much more .

Not just the one time transaction trying to screw the customer soon like so many I see .

[ggt]

The "secret" to corporate longevity is really no secret at all and has been around for hundreds of years...good business practices...quality goods and services...putting a good portion of the income back into the company, treating employees with dignity and rewarding excellence and integrity at the highest levels of leadership in the company...